Thai Bond Market Association to Incorporate Blockchain Technology

The association announced it’s pushing for a fintech platform using blockchain technology. The new registrar system will cut issuance times in more than half.

The Thai Bond Market Association (TBMA) plans to implement a new registrar service platform combining financial technology with blockchain technology. There are ongoing plans to put it to
practice during the current year to improve the growth of the secondary market.

TBMA Wants To Issue New Bond Certificates in Two Days

President Tada Phutthitada of the TBMA wishes to apply to the regulatory sandbox by the end of the year to start the live experiments of the new platform under the regulators’ supervision. If
they succeed, this will be the first fintech platform apply to both the Bank of Thailand and the country’s Securities and Exchange Commission (SEC).

While initially the platform is expected to start issuing bond certificates in 3-4 days — as opposed to the usual 7-15 days, — the ultimate goal is to reduce that time to two days. The new
platform will eliminate the need for physical certificates, as the book entries will be sufficient to represent the holding and settlement of securities.

Phutthitada explained, “The faster bond certificate issuance allows bondholders to trade in the secondary market faster and reduces settlement risk for bond investors. If nothing is done to speed
up bond certificate issuance, the growth of corporate bonds in the secondary market could be limited.”

The Secondary Market Has Registered Incredible Growth in 6 Years

The President recognized the recent growth of the secondary market over the past six years and wished to support its growth by trying to eliminate any risks that might limit it. Last year, the
country reached 5.09 billion baht in the average trading value of corporate bonds, a significant increase from 800 million in 2011.

The platform will run on a private blockchain and deploy a smart contract to operate it. Issuers, registered companies, regulators, and investors will need to register to be allowed to use the
platform. A bond subscription system, bond settlement information, and a verification system for bond transactions are among the features planned for the platform.